Thailand’s Energy Situation in 2010 and Trend in 2011

1. Overview of 2010 Energy Situation

Thailand’s GDP growth rate in 2010, as estimated by the National Economic and Social Development Board (NESDB), was at 7.9% due to such influential factors as global economic recovery and investors’ confidence, resulting in growing exports, investment and consumption of the private sector, hence affecting the overall energy demand of the country which can be summarized as follows.

1.1 Primary Energy Consumption. The total primary energy consumption in 2010 increased by 7.3% from that in 2009, or at a level of 1,785 thousand barrels per day (KBD) of crude oil equivalent, owing to the high economic growth rate of the country in this year which resulted in increasing demand for all types of primary energy. Natural gas accounted for the largest share of energy consumption, i.e. 44% or an increase of 14.7%, due to the growing demand in the industrial sector and the increasing number of NGV vehicles. Oil consumption was the second largest, holding a share of 37%, or an increase of only 2.2% as oil prices in 2010 had not much increased from the previous year owing to the appreciation of Thai Baht (THB); moreover, part of gasoline and diesel consumption was replaced by NGV. As for coal and lignite, the consumption slightly increased by 1.2% each; whereas the demand for hydropower and imported electricity increased by 11.6% because import of 948 MW of electricity from Nam Theun 2 power project (in Lao PDR) began in March, coupled with plentiful supply of water in domestic dam reservoirs around the end of the year.

1.2 Expenditure on Energy. A total of THB 1,796 billion was spent on energy consumption, an increase of THB 218 billion or 13.8% when compared with that in the previous year. The value of consumption of all energy types increased since the energy price, on average, increased when compared with the 2009 level.

1.3 Energy Import. The total energy import in 2010 was worth THB 894.9 billion, increasing by THB 134 billion or 17.6% from the previous year. The value of crude oil import increased as the import price increased from US$ 61.90/barrel in 2009 to US$ 78.80/barrel this year. Similarly, the import value of petroleum products and coal also increased due to higher prices as well as greater imported volume of coal to replace domestic lignite of which the production had declined. The value of electricity import increased as per the increased volume of import because a new supply resource, i.e. Nam Theun 2 in Lao PDR, started commercial operation in this year, with a supply of 948 MW to Thailand.

1.4 Energy Export. In 2010, the value of energy export total THB 263.3 billion, increasing by THB 27.3 billion or 11.6% from 2009. The export of crude oil and petroleum products was worth THB 259.5 billion in total, increasing by THB 26.8 billion or 11.5% from the previous year.

2. Energy Situation by Energy Type

2.1 Crude Oil. Crude oil import in 2010 was at a rate of 803 KBD, decreasing by 0.1%; however, the import value was THB 738 billion, or an 18.5% increase, as the price of crude oil had increased by 27.3%, from an average import price at US$ 61.90/barrel in 2009 to US$ 78.80/barrel in 2010.

2.2 Petroleum Products. Compared with 2009, the total petroleum product consumption in 2010 increased by 2.6%. Diesel consumption increased by 0.3% due to the economic growth, and LPG utilization increased by 11.3% resulting from the growing demand of the industrial sector. Jet petroleum demand increased by 6.6% as a result of the intensive tourism promotion in this year. However, consumption of gasoline was down by 1.1% as the average retail price in this year was higher than that in 2009 while that of fuel oil slightly decreased by 0.2%.

● Gasoline – The average consumption of gasoline in 2010 was at a level of 20.4 million litres/day, a decrease of 1.1% compared with that in 2009. Gasoline consumption in May 2010 dropped to the lowest level of the year due to the impact of domestic political unrest, causing people to refrain from travelling. In addition, the average gasoline price in this year was higher than that in 2009, inducing a number of car users to switch to use NGV instead. All of these major factors contributed to the decrease in gasoline consumption all year round. The ratio of regular gasoline consumption to premium gasoline consumption was 61: 39.

● Gasohol – Of the total gasoline consumption in 2010, gasohol accounted for the largest share, i.e. 59%, with a demand level at 11.9 million litres/day, or a 2.4% decrease. Gasohol 95 accounted for 7.7 million litres/day (a decrease of 7.7%) whereas Gasohol 91 consumption had much increased as a result of promotional measures pursuant to the government policy. Furthermore, towards the year end, the government intensively promoted the use of alternative energy to reduce oil import, by reducing the contribution rates to the Oil Fund, resulting in retailed price reduction for Gasohol 91 and Gasohol 95 (E20) by 1 Baht/litres and 1.10 Baht/litres, respectively, to induce greater use of Gasohol.

● Diesel – Diesel consumption in 2010 was at an average of 50.8 million litres/day, an increase of 0.3%. The consumption in early 2010 was close to that in late 2009 but declined in the middle of the year as the harvest period ended and the rainy season began, which usually cause a slowdown in agricultural product transportation and hence a decrease in diesel demand. In November, diesel consumption rebounded because flood problems had subsided, coupled with the government’s relief measure, reducing the contribution rates to the Oil Fund during the oil price crisis, which was introduced around year end to alleviate people’s burden. Also, the tourism segment revived in the wintertime. These factors had caused a slight increase in diesel consumption all year round.

Currently, diesel distribution in Thailand consists of two product types, i.e. high speed diesel (HSD) and biodiesel (B5). Since 1 June 2010, the government has mandated all HSD be mixed with biodiesel at 3% (B3) by volume so as to encourage greater use of alternative energy and to get prepared for the introduction of mandatory biodiesel (B5) nationwide within 2011.

● Biodiesel (B5) – In 2010, the distribution of B5 was at a level of 19.5 million litres/day, accounting for a decrease of 12.2%. Early in the year, the consumption was close to that at the end of 2009; in the middle of the year, however, it began to decline due to the domestic political unrest in May, causing people to refrain from travelling. Moreover, the price of biodiesel (B5) in the year was not much different from the diesel price, so it was not attractive enough to induce greater use of biodiesel (B5).

● LPG, Propane and Butane – The demand of these products had continuously been increasing at a high rate since 2008/2009; in 2010 the growth rate was 15.2%, with the demand level at 30.4 million litres/day. The consumption increased in all sectors, i.e. household, industrial, transportation (as fuel for vehicles), petrochemical (as feedstock) and on-site (own) use. One reason for such a remarkable increase was the government’s stabilization of LPG price at a low level, coupled with the recovery of economic conditions, making the demand in the industrial sector increase highly by 32.5% and the use as feedstock in the petrochemical industry increase by 28.0% while the use of LPG as fuel for vehicles in 2010 increased only by 0.5%.

2.3 Petroleum Consumption in the Land Transport. In 2010, the daily consumption volume was at 61.4 million litres of crude oil equivalent, accounting for an increase of 1.4% compared with the previous year. The consumption volume of diesel was close to that in 2009 while that of gasoline decreased by 1.1% as the retail price of gasoline in this year was pretty much higher than the 2009 level. In addition, certain areas were badly affected by floods during the end of the year, which also caused a decrease in petroleum consumption. The amount of LPG consumption was also close to that in 2009, with an increase of only 0.5%. NGV demand increased at a high rate of 22.4% due to the government policy promoting NGV utilization and other supportive factors, i.e. rising prices of gasoline and diesel since early 2009, resulting in a greater number of consumers switching to install NGV engines instead.

As at the end of November 2010, the accumulated number of NGV vehicles was 218,990 and the total number of NGV service stations was 426 – of this, 216 stations are in Bangkok and its vicinities and 210 stations in other provinces. NGV consumption could replace 12.2% and 4.6% of gasoline and diesel utilization respectively, accounting for an average oil replacement at 6.9%. The amount of NGV consumption in the whole year was averaged at 175 million cubic feet per day (MMSCFD), or about 4,868 tons/day.

2.4 Natural Gas Consumption. In 2010, the demand of natural gas was at a level of 4,086 MMSCFD, increasing by 14.7% from that in 2009 due to growing demand in all sectors. Natural gas was used in various manufacturing sectors, i.e. power generation, 67%; gas separation plants, 17%; industry, 12%; and automobiles, 4%.

2.5 Lignite/Coal Consumption. In 2010, lignite/coal consumption totaled 35 million tons, increasing by 1.2% from that in 2009 (based on the heating value), divided into consumption of lignite at 18 million tons and of imported coal at 17 million tons. Of the total lignite consumption, 16 million tons was used for power generation by EGAT; the remaining 2 million tons was used in the industrial sector, e.g. cement manufacturing, paper, food, etc.

3. Electricity

3.1 Installed Capacity. Thailand’s installed capacity in 2010 was at 30,160 MW. The peak load occurred on Monday, 10 May 2010, at 14.00 hrs, reaching 24,630 MW which was 2,034 MW higher than the 2009 peak load (22,596 MW), or an increase of 9.0%.

3.2 Power Generation. The amount of power generation, together with power purchase by EGAT, in 2010 totaled 165,457 gigawatts-hours (GWh), increasing by 11.5% compared with that in the previous year. The share of individual fuel types used for power generation was as follows: natural gas, 71%; lignite/coal, 18%; hydropower, 4%; import, 5%; renewable energy, 2%; and oil, 0.5%.

3.3 Power Demand. In 2010, power demand totaled 147,724 GWh, increasing by 9.6% from that in 2009. The demand increased at the beginning of the year owing to the economic recovery which continued from the end of 2009. However, the demand slowed down in the second and third quarters of the year due to the impact of Thai Baht appreciation on the private sector consumption and exports. In addition, the political unrest resulted in decreasing power demand of the department store cluster. The food manufacturing industry also slowed down due to the seasonal decrease in agricultural feedstock. Moreover, towards the end of the year, several areas were badly affected by floods, followed by the beginning of winter; the power demand, therefore, considerably decreased. Thailand’s power demand can be divided into the demand in metropolitan areas and that in provincial areas.

● Metropolitan Areas – The total demand was 44,551 GWh, an increase of 6.8%. In the first three quarters, the demand increased by 12.8%, 11.2% and 5.4% respectively; however, the growth rate was lower than that in each corresponding quarter in the previous year. The demand in the last quarter decreased by 2.0%.

● Provincial Areas – The total demand was 100,234 GWh, an increase of 11.2%. From the first to the last quarters, the demand increased by 17.7%, 12.3%, 8.4% and 7.2% respectively; however, the growth rate was lower than that in each corresponding quarter in the previous year.

3.4 The Automatic Tariff Adjustment Mechanism (Ft). There was no change in the Ft charge throughout the year due to the government policy; hence, the Ft remained at 0.9255 Baht/unit.

4. Trend of Energy Demand in 2011

According to the economic forecast made by the National Economic and Social Development Board (NESDB), it is expected that the GDP growth rate in 2011 will be around
3.5 - 4.5% and that the oil price will be at a level of US$ 80 - 90/barrel. The Energy Policy and Planning Office (EPPO) has, therefore, developed a forecast of energy demand based on the foregoing assumptions. The trend of energy situation in 2011 can be summarized as follows.

4.1 Primary Commercial Energy Demand. It is forecasted that the demand will be at a level of 1,860 KBD of crude oil equivalent, increasing by 4.2% compared with that in 2010. The demand of oil, natural gas, lignite/coal, and hydropower/imported electricity will increase by 2.2%, 5.1%, 2.6% and 32.7% respectively.

4.2 Petroleum Product Demand.

Gasoline and diesel demand in 2011 is forecasted to increase by 2.0% and 2.3% respectively. As for jet petroleum together with kerosene, it is anticipated that the demand will increase by 5.3% owing to the tourism promotional measures. LPG demand is expected to increase by 2.4% due to increasing demand in the household and industrial sectors. Fuel oil demand, however, is forecasted to decrease by 3.9% as utilization in the industrial sector is projected to decrease by 0.4% and the use for power generation will decrease by 59.0%, according to the Power Development Plan (PDP) of EGAT. Hence, the overall annual demand of petroleum products is forecasted to increase by 2.2%.

LPG consumption in 2011 is estimated to reach 7,010 thousand tons, accounting for an increase of 16.8% as the use as feedstock in the petrochemical industry is projected to highly increase by 54.8%, from 1,651 thousand tons in 2010 to 2,556 thousand tons in 2011. In addition, the following new petrochemical factories will come on stream in 2011: the polypropylene (PP) plant of HMC Polymers Co., Ltd., with scheduled operation in early-2011, and the plastic pellet production plant of PTT Asahi Chemical Co., Ltd. (PTTAC) to be used as feedstock for automotive glass manufacturing, with scheduled operation in mid-2011. LPG demand in the household sector is expected to highly increase due to the government policy stabilizing LPG price for this sector at the present level; whereas the demand in the industrial sector is expected to slow down in the second half of 2011 because the government will allow gradual increase in LPG price for industrial use. However, LPG demand in the transportation sector is projected to decrease by 19.4% as the government is encouraging 30,000 LPG-run taxis to switch to use NGV instead – this project will commence in early 2011 (delayed from the initially planned implementation within 2010) and, when the project is completed, it is expected that LPG demand by taxis could be reduced by a maximum of about 15,000 – 25,000 tons/month.